Libya, the world’s 17th largest oil producer, erupted in violence over the weekend after soldiers loyal to Libyan leader Col. Moammar Gaddafi reportedly shot anti-government protestors. The increased violence between pro and anti-Gaddafi forces stirred fears that Libya could temporarily halt the supply of the 1.6 million barrels of crude it produces each day.

Those concerns sent oil prices surging Tuesday morning.

The head of the International Energy Agency has warned crude prices hitting $100 a barrel could be bad news for economic growth. "That is our concern, regardless of the margins of disruption, if the $100 per barrel of oil is continued in 2011, the burden of oil to the global economy is as bad as 2008," Nobuo Tanaka, the Executive Director of the International Energy Agency told CNBC on the sidelines of a major oil conference in Riyadh.

Similar concerns are quickly rippling across Wall Street; with investors keeping a very close eye on prices at the pump. The price of a gallon of gasoline was already at $3.15, according to the U.S. Energy Information Administration.

A rise toward the $3.40 level has significantly curbed consumer spending in the past, noted Stephen Schork, editor of The Schork Report. If oil prices remain in the high 90s, U.S. consumers could see $3.40 per gallon gasoline by summer, he said.

Top 20 Oil Producers and Exporters

Gaddafi Vows to Fight on, Die a Martyr

Kanundrum Capital’s Brian Kelly was playing the oil fear with a contrarian safety trade. Instead of buying the dollar , as many traders were apt to do given its status as the world’s reserve currency, Kelly was considering buying euros . Any threat to the U.S. recovery would likely be met by more action by the Fed to increase liquidity, leading to a weaker dollar and stronger euro, said Kelly.

“If you get a contraction in global trade, then you have QE3 coming into play which will weaken the dollar and makes Europe the safe haven play,” Kelly speculates.

However, other investors are biding their time; there are still plenty of oil bears that cautioun events in Libya may be a lot of tempest in a pot of tea.

By mid-morning oil prices had retreated from their highs due in large part to assurances from OPEC that it would increase production to offset any reduced supply from Libya.

______________________________________________________Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment, but not have it published on our Web site, send those e-mails to fastmoney@cnbc.com.

For Joe TerranovaTerranova is Chief Market Strategist of Virtus Investment Partners, LTDVirtus Investment Partners Owns More Than 1% Of (ABAX)Virtus Investment Partners Owns More Than 1% Of (AMKR)Virtus Investment Partners Owns More Than 1% Of (CCG)Virtus Investment Partners Owns More Than 1% Of (CASS)Virtus Investment Partners Owns More Than 1% Of (CSVI)Virtus Investment Partners Owns More Than 1% Of (EXR)Virtus Investment Partners Owns More Than 1% Of (FCFS)Virtus Investment Partners Owns More Than 1% Of (IGE)Virtus Investment Partners Owns More Than 1% Of (KRC)Virtus Investment Partners Owns More Than 1% Of (LDR)Virtus Investment Partners Owns More Than 1% Of (LPHI)Virtus Investment Partners Owns More Than 1% Of (NRCI)Virtus Investment Partners Owns More Than 1% Of (DBV)Virtus Investment Partners Owns More Than 1% Of (XLB)Virtus Investment Partners Owns More Than 1% Of (XLV)Virtus Investment Partners Owns More Than 1% Of (XLP)Virtus Investment Partners Owns More Than 1% Of (XLY)Virtus Investment Partners Owns More Than 1% Of (XLE)Virtus Investment Partners Owns More Than 1% Of (XLF)Virtus Investment Partners Owns More Than 1% Of (XLI)Virtus Investment Partners Owns More Than 1% Of (XLK)Virtus Investment Partners Owns More Than 1% Of (XLU)Virtus Investment Partners Owns More Than 1% Of (SUBK)Virtus Investment Partners Owns More Than 1% Of (WDFC)Virtus Investment Partners Owns More Than 1% Of (YDNT)Virtus Investment Partners Owns More Than 1% Of (DPUKF)

For Brian KellyAccounts Managed By Kanundrum Capital Own (AGO)Accounts Managed By Kanundrum Capital Own (AMD)Accounts Managed By Kanundrum Capital Own (INTC)Accounts Managed By Kanundrum Capital Own (ATW)Accounts Managed By Kanundrum Capital Own (DBA)Accounts Managed By Kanundrum Capital Own (EBAY)Accounts Managed By Kanundrum Capital Own (FRO)Accounts Managed By Kanundrum Capital Own (MCP)Accounts Managed By Kanundrum Capital Own (PGH)Accounts Managed By Kanundrum Capital Own (PWE)Accounts Managed By Kanundrum Capital Own (SLV)Accounts Managed By Kanundrum Capital Own (IAU)Accounts Managed By Kanundrum Capital Own (TER)Accounts Managed By Kanundrum Capital Own (TLT)Accounts Managed By Kanundrum Capital Are Long Treasury Bond FuturesAccounts Managed By Kanundrum Capital Are Long Oil FuturesAccounts Managed By Kanundrum Capital Are Long The EuroAccounts Managed By Kanundrum Capital Are Long the British PoundAccounts Managed By Kanundrum Capital Are Short The Australian DollarAccounts Managed By Kanundrum Capital Are Short The U.S. Dollar

For Dennis GartmanFunds managed by Dennis Gartman are long Aussie DollarsFunds managed by Dennis Gartman are long Canadian DollarsFunds managed by Dennis Gartman are long GoldFunds managed by Dennis Gartman are long WheatFunds managed by Dennis Gartman are long CornFunds managed by Dennis Gartman are long SoybeansFunds managed by Dennis Gartman are long SugarFunds managed by Dennis Gartman are long CrudeFunds managed by Dennis Gartman are long Natural GasFunds managed by Dennis Gartman are short EurosFunds managed by Dennis Gartman are short British Pound SterlingFunds managed by Dennis Gartman are short Yen

For Anthony ScaramucciSkyBridge Capital is a fund of funds manager. Funds held may or may not own the recommended securities.